ExxonMobil has filed a lawsuit against Russia after President Vladimir Putin prevented the oil company from exiting its sole remaining operation in the country.
Russia restricted investors from “unfriendly” countries from selling shares in crucial energy projects and banks in the country until the end of the year, increasing pressure on the West in the sanctions standoff.
Exxon has been attempting to exit the Sakhalin-1 project in the east of Russia since March. However,this move was hampered by a presidential decree issued earlier this month.
If Exxon resumes normal operations at the project, it could resolve the dispute, according to Russian state-owned oil company Rosneft.
Putin intensified his grip on Russia’s finance and energy sectors earlier this month, prohibiting foreign companies from getting rid of their assets as part of “national interests” measures.The decree came soon after Exxon announced that it was in talks to sell its 30% stake in Sakhalin-1 to an unidentified third party.
The company said: “We announced in March our exit plans and we continue to take the necessary steps to do so. Exiting is a complex process and as an operator we must protect the safety of employees, the environment and the work.”
Before the invasion of Ukraine, Sakhalin-1 produced approximately 220,000 barrels of oil per day, making it one of Russia’s largest Western exports.
However, Exxon declared a force majeure on the project in April, citing sanctions that prevented normal operations.
Since then, production has dropped to around 10,000 barrels per day, with some associated natural gas production.
According to Rosneft, Sakhalin-1 stopped oil production in mid-May due to Exxon’s decision to withdraw from the project.
According to tanker-tracking data monitored by Bloomberg, there have been no crude exports from the De Kastri terminal, which serves Sakhalin-1, since June.
BP, Shell, and TotalEnergies are among the Western oil majors that have stated their intention to leave Russia since the invasion of Ukraine. However, in some cases, delayed legal and operational issues have prevented them from leaving quickly.